WIPO: Cybersquatting Cases Rise To Record Levels

By Monika Ermert for Intellectual Property Watch
Cybersquatting is on the rise, according to the World Intellectual Property Organisation (WIPO), which published statistics last week on case filings under its international Internet domain name dispute settlement system.

The WIPO Arbitration and Mediation Centre in 2007 recorded 2,156 complaints filed under the Uniform Domain Name Dispute Resolution Policy (UDRP), 18 percent more than 2006 and 48 percent more than 2005. The number of cases for the first time surpassed the record established in the year 2000, immediately after the introduction of the UDRP, and for the first time exceeded 2,000 cases.

WIPO Deputy Director General Francis Gurry said the rise in cases after years of declining numbers raises concerns about the possible introduction of new Top Level Domains (such as .com) announced by the Internet Corporation for Assigned Names and Numbers (ICANN) for late 2008.

“The potentially useful purposes of any new domains would be frustrated if these get filled predominantly with automated pay-per-click content,” said Gurry. This is not just an issue of protecting the rights of trademark holders, but also an issue of the reliability of the addressing system of the Internet in matching interested parties with authentic subjects.” Gurry said.

Gurry named domain name “tasting” and privacy or proxy registration services as major problems for trademark owners and case handlers. ICANN already has reacted with regard to tasting – a practice that allowed short term registrations of names for free – by passing rules requiring tasters to pay the ICANN fee in the future. Tasting was interesting for, among others, so-called parking websites that benefit from pay-per-click advertisements posted on these sites.

Torsten Bettinger, panellist for WIPO’s arbitration centre and author of a recently published handbook on domain name law, said: “We see a lot of so-called ‘parking websites’ that allow to profit from the click-through traffic. I think it accounts for the main part of the growth in case numbers.”

While in the past grabbers intended to sell the domain names to trademark owners in the first place, the new business model has been to make money from click-rates. Not only domain ‘parkers’ themselves, but also service providers who offer the parking services should be held liable, said Bettinger, who represents a German company in a complaint before the German Court of Justice.

Bettinger agreed that additional cybersquatting cases can be expected when new TLDs are introduced by ICANN. Careful preparations against possible grabbing and cybersquatting and a no-rush approach therefore are to be recommended to ICANN, Bettinger said, adding that there already has been improvement in anti-cybersquatting policies with newly introduced TLDs like .asia.

Despite WIPO concerns about grabbing of addresses in new TLDs, the majority of cases concern .com addresses, which make up nearly three quarters (73.6 percent) of all cases. The total number of disputed .com domains is 2,424, up from 2,139 in 2006. Second in the ranking is .net with 287 in 2007 (up from 203 in 2006). The .info domain, one of the new domain names, ranks third with dispute filings up from 78 to 245. New domains may not be as interesting for the parking model because of lower traffic, Bettinger suggested.

Case filings from the country code TLDs (ccTLDs, like .ch for Switzerland) that use WIPO for dispute settlement have risen from 201 (2006) to 251 (2007) with .fr-addresses leading the statistics accounting for 75 disputed names, up from fourth place in 2006 (with only 20 disputed names). Disputes related to Spanish and Swiss ccTLDs rank second and third.

The top five sectors for complaints were biotechnology and pharmaceuticals, banking and finance, Internet and information technology, retail, and entertainment, WIPO said. Pharmaceutical manufacturers remained the top filers due to numerous variations of protected names registered for websites offering or linking to online sales of medicines, it said.

What also looks pretty stable is the country of origin of the complaints and country of residence of complainants – with the US leading both lists by far. Altogether, WIPO decided 12,334 UDRP-based cases between December 1999 and December 2007. Also by far the majority of decisions of WIPO expert panels result in the transfers of the disputed domains. Of the three-quarters of cases decided by the panels – one quarter is settled without panel decision – 85 percent ordered a transfer.

Yet there are also critical voices asking for a review of the UDRP to allow more effective counteraction against reverse domain-name hijacking. According to these critics, there are a number of UDRP filings that do deliver any proof for bad-faith registration and even bank on false statements hoping that the case respondent will not answer and they can win the domain. While some cases of reverse domain name hijacking can be retrieved via WIPO’s extended online legal index page for UDRP case there are no recordings for 2007.

WIPO is one of three active UDRP providers accredited with ICANN, the private sector-led governance body for the domain market. The US-based National Arbitration Forum (NAF) a month ago also spoke of rising case filings. It recorded 1,805 cases in 2007. The Asian Domain Name Dispute Resolution Center recorded only 34 filings in 2007. A new competitor in arbitration service is the Czech Arbitration Court (CAC), based in Prague, which has been accepted by the ICANN as of January this year as UDRP provider.

Monika Ermert may be reached at info@ip-watch.ch.